Alibaba pledges to combat fake goods on its shopping portals

HANGZHOU (Reuters) - Alibaba Group Holding Ltd, China’s largest e-commerce platform, said it will commit “as many resources necessary” to stop the sale of pirated goods on its Taobao shopping portals, where transactions exceeded $161.7 billion last year.

The company said its incoming chief executive would join a task force to combat piracy on its platforms.

Alibaba has been clamping down on the sale of fake goods, but users of Alibaba’s Taobao Marketplace, which is similar to Amazon.com’s marketplace, can still find knockoff Chanel bags or Vera Wang dresses. Its Taobao Mall has storefronts where retail brands can sell to consumers.

Industry watchers widely expect Alibaba to seek an initial public offering as early as this year, and intellectual property protection concerns may turn off some potential investors. Addressing the issue now could help the company avoid some uncomfortable questions during an IPO road show.

The company said it will partner with government bureaus and ministries such as China’s Ministry of Public Security to fight counterfeiting and intellectual property rights infringement.

“Counterfeits are the narcotics of the marketplace,” said Alibaba founder and Chairman Jack Ma, who announced in January that he was stepping down as CEO. “We don’t want Alibaba’s name to be associated with counterfeiting.”

Incoming CEO Jonathan Lu will head the IP task force, which will also include chief risk officer Polo Shao.

“We are committed to put as many resources as necessary to tackle the problem,” Shao said in a speech at Alibaba’s headquarters in Hangzhou, about an hour from Shanghai by high-speed train.

The task force will cooperate with government bureaus to report stores that infringe on intellectual property rights, to share information and to help trace the source of fake goods.

In December, the United States dropped Taobao from its annual list of the world’s most “notorious markets” for sales of pirated and counterfeit goods because the company had “undertaken notable efforts” to clean up its shopping sites.

In September, Taobao Marketplace signed a pact with the Motion Picture Association (MPA), an affiliate of the Motion Picture Association of America, to curb the sale of counterfeit and copyright-infringing products on the platform.

Alibaba Group said in December the value of transactions on its Taobao platforms exceeded 1 trillion yuan ($161.74 billion)for the first time in January-November last year.

“The protection of IPR and fighting against counterfeit goods, if we don’t do it well, will be something I’ll regret,” Ma said.

In 2012, Alibaba said it provided information to law enforcement officers involving 72 brands, and 170 million yuan worth of merchandise was taken down from its shopping sites.